The NPR Politics Podcast - Another Turn In Trump's Economic Policy

Episode Date: May 23, 2025

President Trump announced plans to levy 50 percent tariffs on goods imported from the European Union, and on iPhones not made in the U.S., causing stock markets to tumble. We look at the impact of the president's shifting trade policies on the market. Then, the challenges of bringing some manufacturing jobs to the U.S., and we bid farewell to a podcast stalwart. This podcast: voting correspondent Miles Parks, chief economics correspondent Scott Horsley, senior political editor and correspondent Domenico Montanaro, and political correspondent Susan Davis.This podcast was produced by Lexie Schapitl & Casey Morell, and edited by Casey Morell. Our executive producer is Muthoni Muturi.Listen to every episode of the NPR Politics Podcast sponsor-free, unlock access to bonus episodes with more from the NPR Politics team, and support public media when you sign up for The NPR Politics Podcast+ at plus.npr.org/politics.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Keeping up with the news can feel like a 24 hour job. Luckily, it is our job. Every hour on the NPR News Now podcast, we take the latest most important stories happening and we package them into five minute episodes. So you can easily squeeze them in between meetings and on your way to that thing. Listen to the NPR News Now podcast now. Hi, this is R.M. in Southern California. I'm about to open a large envelope. The return address says University of Southern Maine, where I just graduated from the Stone Coast MFA Creative Writing Program. There it is, my diploma, in all its calligraphic glory. This podcast was recorded at 1238 p.m. on Friday, May 23rd, 2025.

Things may have changed by the time you hear it, but I'll probably be revising my thesis novel to pitch to literary agents. Here's the show. That's very dramatic. I bet his novel would be good. Do they not give out degrees anymore in person like when you walk? I was really nervous honestly as he was opening. I was like, oh god is it going to be a letter saying he's like missing one credit or something like that and has to like go back? I was like, Oh no. Fun fact, I used to go to basketball camp at the University of Southern Maine every summer when I was in high school.

Yeah. Well, that's where you got your skills. Hey there. It's the MPR Politics podcast. I'm Miles Parkside cover voting. I'm Domenico Montanaro, senior political editor and correspondent. And MPR chief economics correspondent Scott Horsley is here with us now. Hi, Scott. It's great to be with you all. I think some schools withhold the diploma until you return your gown. Oh, Scott knows everything. Today, if we want to focus on something he also knows a lot about, the economy, and the ever-changing messages from Washington that the markets and individual

taxpayers are trying to parse out this week. Scott, I want to start with tariffs because there was some news today. President Trump has walked a lot of his tariff proposals back, but today floated new tariffs on the EU and on products made by Apple. Can you walk us through what he's proposing and why? So the president went on social media. He complained that trade talks with the European Union have been going nowhere. And so he threatened that come June 1st, he's going to hit all European imports with a 50%

tariff and a 50% import tax. He also threatened to level a 25% import tax on iPhones if Apple doesn't come around and start making those smartphones here in the United States, which seems unlikely. And interestingly, smartphones have been largely spared from the trade war up until now. So if that were actually to come to pass, that would be a significant price increase. That was a little confusing to me though, because generally tariffs, I think of tariffs as something you slap on countries, not on companies. Am I wrong there? Well, as we've pointed out many times, tariffs are really something you slap on consumers

and businesses here in the United States. But we tend to talk about tariffs as being directed at other countries rather than a US-based employer, a very valuable US-based employer. Yeah. Dominico, how do you see this playing out politically? We've talked so many times on this podcast, and Scott could talk about this more, but Wall Street really likes stability, consistency. And this is the furthest thing from over the last few months, where the markets have just gone up and down Based on what seems like Trump's whims Yeah

a financial person asked me earlier in the week if if the president had learned his lesson from some of the market gyrations he He'd caused and that had caused him to walk back some of his tariff warnings earlier, and I said no I don't think he really has I think he's still kind of wedded to the to the tariff model even though every time he does It the the investor class rebels against him and he sometimes has to retreat. I guess you could also argue that investors haven't necessarily learned their lesson because last week, after they relaxed a lot of the triple digit tariffs against goods from China, Wall Street really rallied. We had an enormous rally on the stock market last week. It was as if investors thought, oh, the trade war's over.

And now they've been reminded that no, maybe not. Maybe he feels like he has some wiggle room here because the market did rally and thinking that the market was just gonna be with him. But again, we're seeing signs today where the market is on the decline midday based on this news. And you know, it's one of those things you would think that Trump would look at,

not just the stock market, but also his very low approval ratings when it comes to tariffs. I mean, our latest NPR PBS News Marist poll had a 34% approval rating for his handling of tariffs and 39% on the economy, just a total inverse of what it was in the Trump first term. And it's not just tariffs that are weighing on the market this week. We've also seen a lot of volatility in the bond market, which we talk less about usually than the stock market, but the bond market is sort of what polices the government's credit worthiness. And of course, a week ago, we had Moody's credit rating agency come out and say, you

know, we don't think the U.S. deserves a triple A bond rating anymore because it's got this huge government debt and there doesn't seem to be any movement to address that debt. And of course, the bill that was passed in the House this week would just exacerbate that debt. It cuts taxes, so we see less revenue coming in and the the spending cuts are you know? very small compared to the the big revenue cuts in the tax cuts so The the bond market doesn't like that and that also weighed on the stock market How does that actually impact the average person?

traditionally the market for US government bonds has been sort of the Safest possible investment people put their money in government treasury bonds when they're worried about something else. But with the Moody's downgrade and the reaction in the markets to the House bill this week, there seems to be a sense that maybe US government debt is not as safe and credit worthy as we thought it was. And so we're going to demand a higher interest rate in order to loan money to continue bankrolling these big government deficits. When that happens, it means the

government has to pay more in interest. So we now see interest payments are the second biggest item on the government budget after Social Security. We're spending more on interest than we are on defense and Medicare and anything else other than social security. But it also raises borrowing costs for private borrowers. So if you're looking for a home mortgage, for example, that's typically tied to the yield on 10-year treasuries. We saw home mortgage rates climb up this. They were already high, but they climbed higher this week as the bond market moved.

Some other private interest rates are also pegged to the bond market moved. Some other private interest rates are also pegged to the bond market. So whether you're carrying a balance on your credit card or trying to get a business loan or borrow money for a car loan, all those things are affected by what's happening in the bond market. Gosh, it makes my personal finance brain really stressed out to hear you talk about how much money

the country's paying in interest compared to defense and things like that. Yeah, none of this is good for us as taxpayers or as people who have to borrow money for our own personal expenses. Domenico, I want to get your perspective on the big bill that passed in the US House this week. It really just extended the tax cuts from 2017 into the future, should it become law. I guess I wonder if that means that the average taxpayer next year is not really gonna feel any different

than they did last year. Is there going to be some big win, I guess, from voters if this bill becomes law? Probably not for Republicans, to be honest with you. I mean, if Republicans were hoping for that, the point you make is exactly right. People are not going to feel a tax, you know, cut the way that they might have in 2017 and

felt good about it, because they, you know, got more money in their pockets. This just was from a defensive posture, it prevents people seeing attacks increase. And you know, that's not something people would generally vote on. They would vote on whether or not prices are too high or if they're coming down, if your taxes are too high or if they're coming down. Things staying at stasis and where they are is not likely to be something that Republicans

are gonna see very much political benefit from. And you can see Democrats already sort of sharpening the knives because of the debate around Medicaid and the potential cuts for work requirements, et cetera, and the millions of people who might be left off Medicaid rolls. Because of it, I was reading one newsletter from Dan Pfeiffer, who was a former Obama advisor, campaign advisor, and White House advisor. He put it this way and it seems like a 2026 message to me. The bill is both a policy disaster and moral monstrosity.

It adds trillions to the deficit, defunds Planned Parenthood, guts Medicaid, slashes food stamps, raises costs on millions of families, and gives the richest Americans a massive tax cut. I think we're going to be hearing a lot of those talking points over the next year from Democrats. Okay. Well, time for a quick break. More economics when we get back. Support for this podcast and the following message come from Made in Cookware. President and co-founder Jake Kalik shares a tool that's useful for both master and newbie griller. The craftsmanship of the carbon steel griddle enhances your grilling experience because

it allows you a totally different type of grill surface that opens up the amounts of food you're able to cook. So the griddle is the perfect accessory to add to your grill and kind of widen your grilling game. Learn more about Made in Cookware at madeincookware.com. I'm Tonya Mosley, co-host of Fresh Air. At a time of sound bites and short attention spans, our show is all about the deep dive. We do long-form interviews with people behind the best in film, books, TV, music, and journalism. Here our guests open up about their process and their lives in ways you've never heard

before. Listen to the Fresh Air podcast from NPR and WHYY. On the Indicator from Planet Money podcast, we're here to help you make sense of the economic news from Trump's tariffs. It's called in game theory, a trigger strategy, or sometimes called grim trigger, which sort of has a cowboy s green to it to what exactly a sovereign wealth fund is for insight every weekday. Listen to NPR's, the indicator from Planet Money. And we're back. And Scott, when we think about many aspects of Donald Trump's economic policies, tariffs kind of being the most notable one, I think. The stated goal really is to get manufacturing back

to the United States. But you recently reported a story that looked at this issue in depth through the lens of showerheads. And specifically, there was an experiment as part of your story. And I'm hoping you could just kind of walk us through that. Yeah, this is how I got an education on the showerhead manufacturing process.

There's a fellow based in Austin, Texas, who markets showerheads that are made right now in Vietnam and China. And so when the president leveled big tariffs on Asian imports this spring, this guy went out and said, maybe it's time to look and see if there's a business case for moving that production to the United States. So he scouted around to see how much more it might cost. It could cost a lot more. And then he wanted to know if his customers would be willing to pay more in order to get a shower head that's domestically produced instead of imported from Vietnam or China. So he actually set up a website where

you could choose, just like you could choose the finish you wanted, the color you wanted your showerhead to be, you could also choose to have it made domestically. But if you did that, you'd have to pay more, you'd have to pay about 85% more for the domestically made showerhead than the imported showerhead. You can question whether that would always be the result, but I do think this suggests that there is a limited willingness on the part of American consumers to pay more for products just because they're manufactured in the United States, especially if we're talking about something like a showerhead where it doesn't seem like

national security is involved or anything like that. Yeah, and the thing is, again, a lot of those kinds of prices could be even higher. I mean, you think about what Trump is doing to Apple now in trying to add on tariffs and say that Apple has to make their iPhones in the United States. One analyst said that iPhones could then cost $3,500. No one's going to pay $3,500 for an iPhone in the United States when right now they cost

about $1,000 or less. That is the issue. When you have supply chains and factories that have been built over generations and are now being able to use cheaper labor overseas, the restructuring of the US economy that it would take to be able to bring that kind of manufacturing back to the United States so that things are also made fairly cheaply is just not possible. And I will say that we do still actually manufacture quite a lot of stuff in the United States, but the stuff that we manufacture in the United States tends to be fairly high value and fairly low labor content.

That is, it's highly automated, we have very efficient factories, they don't need a lot of people. So the kinds of things that take a lot of labor to make, stuff toys and that sort of thing, that's just not going to be done in the United States. This notion that you're going to have this massive reshoring of manufacturing in the US is probably an illusion. In fact, the analyst who gave that price for the iPhone, what it would cost to build an iPhone in the US, that's a fairy tale to think iPhone manufacturing is going to come back to the United States. We talked about how this back and forth, back and forth on the tariffs has played out over the last couple of weeks in the stock market.

But I'm wondering as you have conversations with these small business owners, Scott, how this uncertainty is playing out with them. Oh yeah. Let's suppose you did want to move your manufacturing someplace. That's gonna take time, that's gonna take capital, that's gonna cost money. And are you gonna do that if you think a week or a month later the president's gonna backtrack as he has done now repeatedly over these last four months? He's come out of the gate with these huge tariffs and then he gets dinged by the stock market and he backtracks. He's done it with the US Canada tariffs. He's done it with the quote unquote reciprocal tariffs. We'll

see. I suspect he's probably going to have to do with this threat of a EU tariff. Even if you believe that this could happen, that this would actually encourage more people to relocate factories in the US, it would take a long time for that to happen and a lot of money and that means people need to feel like the tariff environment's gonna Be in place for a while not it's not something that they're gonna do in 30 days. Well, Dominico does feel like US manufacturing Is an issue in every single political campaign that I can remember Why does this sustain? Well, first of all right now it's because it's a Trump bugaboo. I mean, it's something that he's talked about for a long time, for decades, about being able to slap tariffs on other countries to be able to bring money into the United States

and try to bring manufacturing back. And manufacturing is a hugely important thing on the campaign trail because it's a great political backdrop. You know, building things, making stuff, it's tangible. You see a bridge. You're right. The commercials making stuff, it's tangible. You see a bridge. You're right, the commercials of the people like hammering stuff, yeah. Right, of course.

You can rev an engine of a car. You know, those factory jobs were also part of this, like, lore of American history. People being able to climb the, you know, the American dream, climb the ladder of the American dream, you know, with good salaried union jobs, pension and benefits. But, you know, like we talked about,

those jobs are unlikely to be coming back in any real large scale way, the way that they had been in the 50s and 60s, because automation has taken over as much as it has. And I'm going to be really curious to see how much of this becomes an issue on the 2026 campaign trail. Republicans have such a narrow majority, but there are only some 40 seats the Cook Political Report finds between lean Democratic and lean Republican. They're split almost in half by the Democratic and Republican seats and we're gonna

see if you know this idea that you can bring manufacturing back is something that these moderate Republicans are able to convince those voters of. Right I do feel like the automation issue makes for a less a less good commercial know, it's a little less fun to watch somebody just at a computer hitting buttons. There's a robot moving. All right, well NPR's Scott Horsley, thank you so much for walking us through all this. Good to be with you. And we're gonna take one more break and then it's time for Can't Let It Go. Look, we get it, when it comes to new music there is a lot of it and it all comes really fast. But on All Songs Considered, NPR's music

recommendation podcast, we'll handpick what we think is the greatest music happening right now and give you your next great listen. So kick back, settle in, get those eardrums wide open, and get your dose of new music from All Songs Considered, only from NPR. S1 05 Are you one of the half of Americans who say money management is part of their self-care routine? Or one of the 41% of young adults who think financial well-being means having multiple streams of income? On It's Been A Minute, I'm investigating how young people are turning to OnlyFans, sports betting, and Klarna to stretch every last dollar. That's all month long on the It's Been A Minute podcast from NPR.

World news is important, but it can feel far away. Not on the State of the World podcast. With journalists around the world, you'll hear firsthand the effects of U.S. trade actions in Canada and China, and meet a Mexican street sweeper who became a pop star. We don't go around the world. We're already there. Listen to the State of the World podcast from NPR every weekday. And we're back and we are joined by a special guest, Susan Davis. Hi, Sue.

Hello, friends. And it's time for the part of the show, Can't Let It Go, where we talk about things from politics or otherwise that we just cannot let go of. But today, God, I already sound, I feel like I sound sad. The thing we cannot let go of, but that we must, is Sue, right? Yeah. Yeah, I feel like this is a little bit of a one-two punch for our most loyal podcast listeners because just a couple weeks ago, we were sitting around saying goodbye to asthma and this week it's my turn because today's my last day at NPR. I'm heading off into the post-news horizon to see what life is like outside the news cycle,

but man, I'm going to miss you guys. She just can't take it anymore. I can let it go, it turns out. I mean, it really is. I mean, I'm sure all the people listening to this are feeling the same thing, but what a blow for, I mean, I work with you and I still find myself, if I see on my phone that Sue Davis is doing a story or talking about a thing that I need to understand, I still have that moment that I had 10 years ago where I would be like, oh, I need to listen to that because it will help me understand the thing better than anyone else can.

And so I selfishly just in terms of thinking about politics, I don't know how I'm gonna, I might still call you and have you explain things to me. You know, I'm still, you know, I needed to do something outside of politics and outside of news and I don't entirely know what I'm going to do, but I knew I needed to take a break. But I say that at the same time, like still loving this stuff and still loving journalism. And I always thought if I went to leave, if I wanted to step outside of journalism and pursue other things, I wanted to leave happy. I didn't want to leave in the words of Marla Eisen,

a desiccated husk. And I feel that way. Like I still feel, I was driving in this week and I thought something in my head and I was like, oh, that'd be a good story. And I was like, not your problem anymore. I'm gonna email someone else to go do that story. So I still love the work and I still love the people,

but it's really just a personal life choice. I think in the parlance of the people we cover, I'm just ready to spend some more time with my family and my kids. And I'd like to pursue some career stuff that allows me to decide how I spend my time and not have to be so governed by things like breaking news and 10,000 Slack messages and that kind of stuff. But guys, I regret to inform you, we're like trauma bonded for life. Like the things we've seen and done the last 10 years together, and I've known Domenico even before our NPR time together. Like, man, we've seen some things. So it's been a pleasure being in the news foxhole with you all this time. But Sue mentioned that we've known each other since before NPR. I mean, it's almost 20 years now when I look back at the timing. I think we met in 2009, way back on the Tea Party Nation

tour. We probably even crossed paths at some point in the 08 campaign. I read you definitely in 08 when you were working on Wall Street Journal Wire, right? WSJ Wire. Yep, and you were at NBC. Right, working on First Read. And I had to refresh the wire every day because I wanted to see what Sue's take was and what was the latest thing. To your point, Miles, I still will slack Sue something if I'm thinking something in a certain

way that maybe I'm like 80-20 sure about. I want to be like 100-0 sure about. I'll ask Sue. And then if Sue is like, no, that's stupid and here's why, then I'm like, oh, okay, yeah, let's change course because I didn't think about that. So I will definitely miss you for the analysis checks and all of that and making our political acumen stronger here because you're not going to find anybody who has a stronger political acumen than Sue.

And I'll miss you for just the general sense of guidance and friendship overall. I mean, being able to talk to you about what's going on at work or whatever else, it's nice to be able to have somebody who's a gut check. I have always been so inspired by, I don't know if this is too personal, but I mean, you were an incredible mother at the same time, at the wall also. That means a lot to me. Being one of the best political reporters in this business, I do not literally understand how you do it

or how you've been able to do both those things, but it was, as I was thinking about whether we could start, we're a family of two journalists. And I was like, can we do this? And I was like, I've been watching Sue do it like the best of anyone. And so I think that, and honestly, watching Sue do it the best of anyone. And so I think that, and honestly, the advice

you gave me before we had our baby, I still think, and talk about short and to the point, she was like, if you need a pizza at midnight, if you need a beer at 9 AM, do it. Whatever you need in that first year, do it. And I feel like I lived by that mantra, maybe a little too much, but I definitely lived by that mantra. The news cycle doesn't show up when you're having a bad day.

You still have to prioritize the real human things in life. And I do think, especially in politics, because politics is the why, right? It's you have to understand humanity. Like being a good person actually makes you a good political reporter. Because having empathy and an ability to see the world through other people's eyes and shoes, I always thought is one of the hardest things to do in journalism. Like the who, what, when and where take care of themselves, it's the why. That's always the hardest things to do in journalism. Like the who, what, when, and where take care of themselves. It's the why that's always the hardest thing to get at.

So being a good person and being a good political reporter, I'd like to believe go hand in hand if you're doing both right. Well, we are all going to miss you so much, Sue, but good luck. Thank you. That's all for today. Our executive producer is Mathony Maturi. Casey Morell edits the podcast. Our producer is Bria Suggs, and

special thanks to Lexi Schepittle. I'm Miles Parks, I cover voting. I'm Domenico Montanaro, senior political editor and correspondent. And I'm Susan Davis, I covered politics. Oh, past tense. And thank you for listening to the MPR Politics Podcast.